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By Jonathan Stempel
NEW YORK, April 24 (Reuters) - Barclays Plc failedto persuade a U.S. judge to dismiss a lawsuit accusing theBritish bank of defrauding shareholders about a private "darkpool" trading platform even as it was publicly pledging to cleanup its corporate culture.
U.S. District Judge Shira Scheindlin in Manhattan on Fridayallowed most of the lawsuit brought on behalf of investors inBarclays' American depositary shares to go forward.
The share price slid 7.4 percent last June 26 after New YorkAttorney General Eric Schneiderman accused Barclays in his ownlawsuit of concealing how it favored high-speed traders in itsdark pool, known as Barclays LX, and understated their activity.
Shareholders led by Mohit Sahni and Joseph Waggoner accusedBarclays of falsely touting the safety of Barclays LX, even asit promised governance reforms in the wake of its $453 millionsettlement in June 2012 of regulatory charges that it rigged theLibor interest rate benchmark.
Scheindlin said the lawsuit "adequately alleges Barclays'past scandals, its efforts to restore its reputation, and, mostsignificantly, misrepresentations that go to the heart of thefirm's integrity and reputation.
"I cannot conclude as a matter of law that there is not asubstantial likelihood that a reasonable shareholder wouldconsider the misrepresentations about LX important in decidinghow to act," she wrote.
Scheindlin also said the investors offered "strongcircumstantial evidence" that William White, an electronictrading chief at Barclays, intended to mislead people throughhis public comments about Barclays LX, and that this could beimputed to Barclays itself.
The judge did not rule on the merits of the lawsuit, whichseeks class-action status on behalf of ADS investors from Aug.2, 2011 to June 25, 2014. She dismissed claims against twoindividual defendants.
Barclays spokesman Mark Lane declined immediate comment.Jeremy Lieberman, a lawyer for the shareholders, said "we arevery gratified" at the outcome.
Dark pools were designed to let people quietly trade sharesbefore investors in the broader market could learn about and betagainst their trades.
On Feb. 13, a New York state judge rejected Barclays'request to dismiss Schneiderman's lawsuit, which included aclaim under the Martin Act, a powerful state anti-fraud law.
The case, which has a different named plaintiff, is Strougoet al v. Barclays Plc et al, U.S. District Court, SouthernDistrict of New York, No. 14-05797. (Reporting by Jonathan Stempel in New York; Editing by GrantMcCool)
